Axis Bank Shares Plunge As Brokerages Cut Target Price After Q1 Results Missed Expectations

Axis Bank shares fell on Thursday after the bank’s disappointing Q1 results led brokerages to cut target price.

What Happened: Axis Bank saw its net profit rise 4.1% from the previous year to ₹6,034.64 crore, which fell short of analyst estimates of ₹6,458 crore.

The bank's net interest income rose 12.5% to ₹13,448.23 crore. Its net interest margin (NIM), a key profitability metric dropped to 4.05% from the 4.1% posted in the same quarter last year. The Bank’s gross non-performing assets (NPA) and net NPA levels went up to 1.54% and 0.34%, respectively.

Brokerage Views: Citi downgraded Axis Bank to "neutral" and cut target price to ₹1,320. The bank's asset quality deteriorated and growth and return on assets have moderated.

The brokerage attributed higher GNPA and credit costs to lower recoveries. Loan deposit ratio increased 2%, with corporate advances contributing to growth. Reported NIM was flat and core NIM moderated, the brokerage added. 

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Nomura also maintained "buy" call and slashed target price to ₹1,435 and said the bank is entering a challenging phase. The sharp increase in credit costs was due to unsecured retail and lower non-performing loan recoveries, the research firm said.

The bank saw softer loan and deposit growth trends, adding that operating expenses surprise was a positive. The brokerage increased credit cost estimates to 70 basis points over FY25-26. It also cut earnings per share estimate for FY25-26 by 3%-5%.

Macquarie maintained "outperform" call with a target price of ₹1,420. The brokerage said the net profit was 11% below expectations due to higher-than-expected credit costs. It said deposit growth was also weaker than its larger peers and NIMs would also have been down 6 to 7 basis points if not for the interest on income tax refunds the bank received this quarter. 

Nuvama maintained the "buy" call and cut target price to ₹1,430. The brokerage reasoned that the bank continues to trade at a discount compared to its peers and a lack of other investment options in large cap banking, financial services and insurance companies. 

Price Action: Shares of Axis Bank were down 4.35% to ₹1,185.30 on Thursday morning.

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